This Market Is Offering An Opportunity To Lock In Quality High Yields

When I gave an update to my premium readers at the beginning of this month, I mentioned that the S&P 500 gained ground for three straight days between May 25 and May 27. That doesn’t seem like a major accomplishment, except even back-to-back wins have been quite rare for investors in 2022 – let alone three in a row.

My longtime readers know that I’m a baseball fan, and I couldn’t help but think of a line from the 1994 baseball comedy, Major League 2. After a rare win, the manager of the hapless club addresses the team:

“OK, we won a game yesterday. If we win today, it’s called ‘two in a row.’ And if we win again tomorrow, it’s called a ‘winning streak’… It has happened before!”

To give you an idea of how rare winning streaks like that have been this year, consider this… The market only closed higher 13 times in the first 98 trading days of the year.

The S&P was just inches away from officially being in bear market territory last week. Remember, a bear market is defined as a 20% pullback from recent highs. Well, we finally crossed that threshold was crossed this week.

The Nasdaq was already there, having tumbled 24% from its November peak as I write this – not counting Friday’s 400-point freefall.

It has been even tougher for many small-cap stocks, with the Russell 2000 Growth Index shedding more than a quarter of its value year-to-date.

How We Should Respond

We don’t need to delve into the root causes. They are well-documented at this point… inflationary cost pressures, supply chain nightmares, weak earnings guidance, tightening interest rates… You name it.

Against this backdrop, I am pleased (although not surprised) to see that my High-Yield Investing portfolio has largely stood its ground during this selloff. In fact, the current value as I write this is actually a few hundred dollars higher than where we started the year – not a huge gain, but it sure beats the alternative.

While dividend-paying value stocks often have trouble keeping pace with the likes of Amazon in runaway bull markets, they can provide needed ballast and stability when the seas get rough. And once again, they are proving their mettle in these turbulent conditions.

Yet, even our closest performance benchmark, the Russell 1000 Value Index (which tracks blue-chips like AT&T and Wal-Mart) has dipped about 6% for the year. While such indexes are rigidly tethered to a fixed group of stocks that meet narrowly-defined characteristics, we are free to hunt in any asset class we like.

That doesn’t mean that I think the pain is over. In fact, I’ll remind you of what I said three weeks ago:

I hate to be the bearer of bad news, but I think the bears may remain in control of the market over the next few weeks. Yet, here’s the upside… This deep and indiscriminate selloff has set the stage for a powerful rally once inflation has been corralled and we get more clarity from the Fed.

That still rings true today. But with yesterday’s news that the Federal Reserve is taking a more aggressive stance with tightening monetary policy, we’re starting to get that clarity.

There will be plenty of time to get into the details of the Fed’s decision at a later time. But for now, your main takeaway should be that it’s just about time to make a shopping list. That’s exactly what my premium readers and I did during the Covid selloff, and it paid off handsomely.

Again, I don’t know exactly when the bottom will be. But there’s a reason why I have steadily built my cash position to during this downturn. Right now, it accounts for nearly 20% of the portfolio — plenty of dry powder to go hunting for deals.

With this broad retreat deepening the pool of quality 5% to 7% yields (which had become exceedingly rare), I’ve got several promising candidates that I’m looking at for our premium portfolio.

In the meantime, if you’re looking for a the absolute best high yields this market has to offer, then you should check out my latest research…

You’ll learn about 5 “Bulletproof Buys” that have weathered every dip and crash over the last 20 years and STILL hand out massive gains to investors. You’ll also learn more about High-Yield Investing and how to get full access to my premium portfolio.

Go here to learn more now.